Self-Regulatory Organizations; Notice of Filing of a Proposed Rule Change by New York Stock Exchange LLC Amending NYSE Rule 104(e) (Dealings by Specialists) To Modify the Conditions Governing the Specialists' Use of the Price Improvement Trading Message Pursuant to NYSE Rule 104(b)(i)(H), 46124-46126 [E8-18158]

Download as PDF 46124 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices grants the Exchange’s request and designates the proposal as operative upon filing.18 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: sroberts on PROD1PC70 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SRVNYSE–2008–67 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2008–67. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of NYSE. All comments received 18 For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). VerDate Aug<31>2005 16:49 Aug 06, 2008 Jkt 214001 will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE– 2008–67 and should be submitted on or before August 28, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Florence E. Harmon, Acting Secretary. [FR Doc. E8–18153 Filed 8–6–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58278; File No. SR–NYSE– 2008–61] Self-Regulatory Organizations; Notice of Filing of a Proposed Rule Change by New York Stock Exchange LLC Amending NYSE Rule 104(e) (Dealings by Specialists) To Modify the Conditions Governing the Specialists’ Use of the Price Improvement Trading Message Pursuant to NYSE Rule 104(b)(i)(H) July 31, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on July 25, 2008, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Exchange Rule 104(e) (Dealings by Specialists) to modify the conditions governing the specialists’ use of the price improvement trading message pursuant to Rule 104(b)(i)(H). The text of the proposed rule change is available at NYSE, www.nyse.com, and the Commission’s Public Reference Room. 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00188 Fmt 4703 Sfmt 4703 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange seeks to modify the conditions that govern the ability of specialists to provide price improvement pursuant to Rule 104 (Dealings by Specialists). Specifically, the Exchange proposes to amend Exchange Rule 104(e) to remove the requirement that specialists be represented in the quote in a ‘‘meaningful amount’’ before they can send a trading message that will provide price improvement to arriving marketable orders (i.e., those orders capable of trading in the current market upon arrival). Pursuant to Exchange Rule 104(b)(i), a specialist’s algorithm may generate and transmit quoting and trading messages in a number of specific situations detailed in the rule. Under Rule 104(b)(i)(H), one of the permitted algorithmic trading messages allows the specialist to provide price improvement to an order subject to the provisions of Rule 104(e). Rule 104(e)(i) calls for the specialist to be represented in the quote for a ‘‘meaningful amount’’ in order to provide price improvement to an arriving order.3 A ‘‘meaningful amount’’ is defined in Rule 104(e)(ii) as at least ten round lots (usually 1,000 shares) for the 100 most active securities (based on average daily volume) on the Exchange, and at least five round lots (usually 500 shares) for all other securities on the Exchange. The price improvement message capability was designed to provide trading opportunities for which the specialist’s algorithm could interact with orders electronically, supplying 3 Under Rule 104(e)(i), for an incoming buy order, the specialist must be represented in the offer, and for an incoming sell order, the specialist must be represented in the bid. The price improvement offered must be at least one cent. E:\FR\FM\07AUN1.SGM 07AUN1 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices sroberts on PROD1PC70 with NOTICES capital and liquidity to the Hybrid MarketSMas they did in the Exchange’s auction market. Part of this ability is to be able to offer price improvement to other market participants on the Exchange. As originally approved in the Exchange’s Hybrid MarketSM filing,4 the amount of price improvement to be supplied was also subject to minimums based on the quotation spread in the security at the time of the proposed trade with the incoming order.5 However, in SR–NYSE–2007–81, the Exchange removed the minimum price improvement amount based on the Exchange’s belief that these required minimums were a contributing factor to the decline in the level of price improvement offered by specialists.6 The removal of the required price parameters for specialist price improvement has not resulted in an appreciable rise in the level of specialist participation in price improvement trading. The Exchange believes that this is as a result of the ‘‘meaningful amount’’ minimum display requirement in Rule 104(e)(ii). As quote sizes continue to drop on the Exchange,7 the Exchange believes that requiring the ten and five round lot minimums serve as a deterrent to price improvement participation by specialists since the required minimums potentially represent a significant portion of the current average size of bids and offers. Consequently, the Exchange proposes to remove these minimums in an effort to provide an incentive to specialists to participate more fully in the price improvement mechanism. The Exchange notes that Floor brokers have the ability to include discretionary instructions with e-Quotes that they 4 See Securities Exchange Act Release No. 53539 (March 22, 2006), 71 FR 16353 (March 31, 2006) (SR–NYSE 2004–05) (approving, among others, NYSE Rules 104(b)(i)(H) and 104(e)). 5 As first approved in SR–NYSE–2004–05, Rule 104(e) required that the price improvement provided by the specialist be (a) at least three cents where the quotation spread is more than five cents, (b) at least two cents where the quotation spread is three, four or five cents, or (c) one cent where the quotation spread is two cents. 6 In SR–NYSE–2007–81, the Exchange stated that the rate of price improvement offered by specialists had dropped from 1.47% in July 2006 to .03% in July 2007. 7 For example, the average quote size for the top 100 equity securities traded on the Exchange in November 2006 was 18,907 shares on the bid side, and 20,375 shares on the offer side. By November 2007 these values were 3,645 shares and 3,230 shares, respectively. As of May 2008, they are 5,462 shares bid and 4,875 shares offered. For securities beyond the top 100, the averages of bid and offer sizes for bids have also declined, but are slightly higher on the offer side. As of the end of November 2007, the averages were approximately 900 shares bid and 661 shares offered. As of the end of May 2008 the averages are 736 shares bid and 678 shares offered. VerDate Aug<31>2005 16:49 Aug 06, 2008 Jkt 214001 have entered (‘‘d-Quotes’’) pursuant to Rule 70.25. One of the features of dQuotes is that the Floor broker can offer a range in which this interest will trade. By using such discretionary instructions, Floor brokers are able to systemically trade with incoming marketable orders and offer price improvement in a like manner to the specialist algorithm. There are, however, no minimum size requirements placed on Floor brokers’ d-Quotes. Thus, removing the minimum size requirements for specialists’ price improvement trading messages will increase competition and ultimately lead to increased opportunities for price improvement for Exchange market participants. 2. Statutory Basis The basis under the Act for this proposed rule change are the requirements under Section 6(b)(5) 8 that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the instant proposal to remove the requirement that a specialist be represented in the NYSE quote in order to provide price improvement to an incoming order is consistent with the above principles in that it encourages specialists to additionally enhance the liquidity in the market and fosters increased competition among Exchange market participants, thus providing Exchange customers with additional opportunities for price improvement. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) 8 15 PO 00000 U.S.C. 78f(b)(5). Frm 00189 Fmt 4703 Sfmt 4703 46125 as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change; or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2008–61 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2008–61. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You E:\FR\FM\07AUN1.SGM 07AUN1 46126 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–NYSE–2008–61 and should be submitted on or before August 28, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Acting Secretary. [FR Doc. E8–18158 Filed 8–6–08; 8:45 am] BILLING CODE 8010–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58276; File No. SR– NYSEArca–2008–79] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade ELEMENTSSM Linked to the CS/RT Emerging Infrastructure Total Return Index Powered by HOLTTM Due 2023 July 31, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 22, 2008, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’), through its wholly-owned subsidiary NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. sroberts on PROD1PC70 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade the ELEMENTSSM Linked to the CS/RT Emerging Infrastructure Total Return Index Powered by HOLTTM due 2023 (the ‘‘Notes’’), which are linked to the CS/RT Emerging Infrastructure Total Return Index Powered by HOLTTM (U.S. dollar) (the ‘‘Index’’). The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and www.nyse.com. 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 16:49 Aug 06, 2008 Jkt 214001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NYSE Arca included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NYSE Arca has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 1. Purpose The Exchange proposes to list and trade the Notes, which are linked to the Index, under NYSE Arca Equities Rule 5.2(j)(6), which includes the Exchange’s listing standards for Equity IndexLinked Securities.3 The Notes are senior unsecured debt obligations of Credit Suisse, acting through its Nassau Branch (‘‘Credit Suisse’’). The Index is comprised of 50 equally-weighted exchange-listed emerging infrastructurerelated companies that are chosen according to a rules-based methodology for scoring stocks (each an ‘‘Index Component’’ and, collectively, the ‘‘Index Components’’). The Index enables investors to participate in the performance of a selection of companies that have a focus on infrastructure, power and utilities, or agriculture and derive at least 15% of their revenue from the Global Emerging Markets (‘‘GEM’’). A GEM is defined as any country except the United States, Canada, Australia, New Zealand, Japan, Hong Kong, Singapore, Austria, Belgium, Luxembourg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and the United Kingdom. The Exchange is submitting this proposed rule change because the Index does not meet all of the ‘‘generic’’ listing requirements of NYSE Arca Equities Rule 5.2(j)(6) applicable to the listing of Equity Index-Linked Securities. The Index meets all such requirements except for those set forth in NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(vi).4 3 Equity Index-Linked Securities are securities that provide for the payment at maturity of a cash amount based on the performance of an underlying index or indexes of equity securities (an ‘‘Equity Reference Asset’’). 4 NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(vi) provides that all component securities of the underlying index shall be either (A) securities PO 00000 Frm 00190 Fmt 4703 Sfmt 4703 The Exchange represents that: (1) Except for NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(vi), the Notes currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(6) applicable to Equity IndexLinked Securities; (2) the continued listing standards under NYSE Arca Equities Rule 5.2(j)(6) applicable to Equity Index-Linked Securities shall apply to the Notes; and (3) Credit Suisse is required to comply with Rule 10A–3 5 under the Act 6 for the initial and continued listing of the Notes. In addition, the Exchange represents that the Notes will comply with all other requirements applicable to Equity Index-Linked Securities including, but not limited to, requirements relating to the dissemination of key information such as the Equity Reference Asset value, rules and policies governing the trading of equity securities, trading hours, trading halts, surveillance, firewall, and Information Bulletin to ETP Holders, as set forth in prior Commission orders approving the generic listing rules applicable to the listing and trading of Index-Linked Securities, generally, and Equity IndexLinked Securities, in particular.7 As of April 30, 2008, the market capitalization of the ten largest Index Components, accounting for the top 20% of Index weight, was approximately $873.9 billion. The highest weighted stock was Vodafone (other than foreign country securities and American Depository Receipts (‘‘ADRs’’)) that are (x) issued by an Act reporting company or by an investment company registered under the Investment Company Act of 1940, which, in each case, are listed on a national securities exchange, and (y) an ‘‘NMS stock’’ (as defined in Rule 600 of Regulation NMS) or (B) foreign country securities or ADRs, provided that foreign country securities or foreign country securities underlying ADRs having their primary trading market outside the United States on foreign trading markets that are not members of the Intermarket Surveillance Group (‘‘ISG’’) or parties to comprehensive surveillance sharing agreements with the Exchange will not in the aggregate represent more than 20% of the dollar weight of the index. Subject to the pending approval of a separate rule filing (Securities Exchange Act Release No. 58142 (July 11, 2008), 73 FR 41147 (July 17, 2008) (SR–NYSEArca–2008–70)), this subsection will be renumbered as NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v). 5 17 CFR 240.10A–3. 6 15 U.S.C. 78a. 7 See, e.g., Securities Exchange Act Release Nos. 52204 (August 3, 2005), 70 FR 46559 (August 10, 2005) (SR–PCX–2005–63); 56637 (October 10, 2007), 72 FR 58704 (October 16, 2007) (SR– NYSEArca–2007–92); 57132 (January 11, 2008), 73 FR 3300 (January 17, 2008) (SR–NYSEArca–2007– 125); 56838 (November 26, 2007), 72 FR 67774 (November 30, 2007) (SR–NYSEArca–2007–118); and 56879 (December 3, 2007), 72 FR 69271 (December 7, 2007) (SR–NYSEArca–2007–110). See e-mail from Timothy J. Malinowski, Director, NYSE Group, Inc., to Brian O’Neill, Staff Attorney, and Edward Cho, Special Counsel, Division of Trading and Markets, Commission, dated July 23, 2008. E:\FR\FM\07AUN1.SGM 07AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 153 (Thursday, August 7, 2008)]
[Notices]
[Pages 46124-46126]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18158]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58278; File No. SR-NYSE-2008-61]


 Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by New York Stock Exchange LLC Amending NYSE Rule 104(e) 
(Dealings by Specialists) To Modify the Conditions Governing the 
Specialists' Use of the Price Improvement Trading Message Pursuant to 
NYSE Rule 104(b)(i)(H)

July 31, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on July 25, 2008, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 104(e) (Dealings by 
Specialists) to modify the conditions governing the specialists' use of 
the price improvement trading message pursuant to Rule 104(b)(i)(H). 
The text of the proposed rule change is available at NYSE, 
www.nyse.com, and the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange seeks to modify the conditions that govern the ability 
of specialists to provide price improvement pursuant to Rule 104 
(Dealings by Specialists). Specifically, the Exchange proposes to amend 
Exchange Rule 104(e) to remove the requirement that specialists be 
represented in the quote in a ``meaningful amount'' before they can 
send a trading message that will provide price improvement to arriving 
marketable orders (i.e., those orders capable of trading in the current 
market upon arrival).
    Pursuant to Exchange Rule 104(b)(i), a specialist's algorithm may 
generate and transmit quoting and trading messages in a number of 
specific situations detailed in the rule. Under Rule 104(b)(i)(H), one 
of the permitted algorithmic trading messages allows the specialist to 
provide price improvement to an order subject to the provisions of Rule 
104(e). Rule 104(e)(i) calls for the specialist to be represented in 
the quote for a ``meaningful amount'' in order to provide price 
improvement to an arriving order.\3\ A ``meaningful amount'' is defined 
in Rule 104(e)(ii) as at least ten round lots (usually 1,000 shares) 
for the 100 most active securities (based on average daily volume) on 
the Exchange, and at least five round lots (usually 500 shares) for all 
other securities on the Exchange.
---------------------------------------------------------------------------

    \3\ Under Rule 104(e)(i), for an incoming buy order, the 
specialist must be represented in the offer, and for an incoming 
sell order, the specialist must be represented in the bid. The price 
improvement offered must be at least one cent.
---------------------------------------------------------------------------

    The price improvement message capability was designed to provide 
trading opportunities for which the specialist's algorithm could 
interact with orders electronically, supplying

[[Page 46125]]

capital and liquidity to the Hybrid Market\SM\as they did in the 
Exchange's auction market. Part of this ability is to be able to offer 
price improvement to other market participants on the Exchange. As 
originally approved in the Exchange's Hybrid Market\SM\ filing,\4\ the 
amount of price improvement to be supplied was also subject to minimums 
based on the quotation spread in the security at the time of the 
proposed trade with the incoming order.\5\ However, in SR-NYSE-2007-81, 
the Exchange removed the minimum price improvement amount based on the 
Exchange's belief that these required minimums were a contributing 
factor to the decline in the level of price improvement offered by 
specialists.\6\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 53539 (March 22, 
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE 2004-05) (approving, 
among others, NYSE Rules 104(b)(i)(H) and 104(e)).
    \5\ As first approved in SR-NYSE-2004-05, Rule 104(e) required 
that the price improvement provided by the specialist be (a) at 
least three cents where the quotation spread is more than five 
cents, (b) at least two cents where the quotation spread is three, 
four or five cents, or (c) one cent where the quotation spread is 
two cents.
    \6\ In SR-NYSE-2007-81, the Exchange stated that the rate of 
price improvement offered by specialists had dropped from 1.47% in 
July 2006 to .03% in July 2007.
---------------------------------------------------------------------------

    The removal of the required price parameters for specialist price 
improvement has not resulted in an appreciable rise in the level of 
specialist participation in price improvement trading. The Exchange 
believes that this is as a result of the ``meaningful amount'' minimum 
display requirement in Rule 104(e)(ii). As quote sizes continue to drop 
on the Exchange,\7\ the Exchange believes that requiring the ten and 
five round lot minimums serve as a deterrent to price improvement 
participation by specialists since the required minimums potentially 
represent a significant portion of the current average size of bids and 
offers. Consequently, the Exchange proposes to remove these minimums in 
an effort to provide an incentive to specialists to participate more 
fully in the price improvement mechanism.
---------------------------------------------------------------------------

    \7\ For example, the average quote size for the top 100 equity 
securities traded on the Exchange in November 2006 was 18,907 shares 
on the bid side, and 20,375 shares on the offer side. By November 
2007 these values were 3,645 shares and 3,230 shares, respectively. 
As of May 2008, they are 5,462 shares bid and 4,875 shares offered. 
For securities beyond the top 100, the averages of bid and offer 
sizes for bids have also declined, but are slightly higher on the 
offer side. As of the end of November 2007, the averages were 
approximately 900 shares bid and 661 shares offered. As of the end 
of May 2008 the averages are 736 shares bid and 678 shares offered.
---------------------------------------------------------------------------

    The Exchange notes that Floor brokers have the ability to include 
discretionary instructions with e-Quotes that they have entered (``d-
Quotes'') pursuant to Rule 70.25. One of the features of d-Quotes is 
that the Floor broker can offer a range in which this interest will 
trade. By using such discretionary instructions, Floor brokers are able 
to systemically trade with incoming marketable orders and offer price 
improvement in a like manner to the specialist algorithm. There are, 
however, no minimum size requirements placed on Floor brokers' d-
Quotes. Thus, removing the minimum size requirements for specialists' 
price improvement trading messages will increase competition and 
ultimately lead to increased opportunities for price improvement for 
Exchange market participants.
2. Statutory Basis
    The basis under the Act for this proposed rule change are the 
requirements under Section 6(b)(5) \8\ that the rules of an exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest. The Exchange believes that the instant proposal to 
remove the requirement that a specialist be represented in the NYSE 
quote in order to provide price improvement to an incoming order is 
consistent with the above principles in that it encourages specialists 
to additionally enhance the liquidity in the market and fosters 
increased competition among Exchange market participants, thus 
providing Exchange customers with additional opportunities for price 
improvement.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2008-61 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2008-61. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You

[[Page 46126]]

should submit only information that you wish to make publicly 
available. All submissions should refer to File Number SR-NYSE-2008-61 
and should be submitted on or before August 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18158 Filed 8-6-08; 8:45 am]
BILLING CODE 8010-01-P

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